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The Arab oil embargo was undertaken with the explicit purpose of forcing the United States and its allies in Europe and Japan to change their policies on the Middle East. It has been lifted, but subject to further review in the light of progress toward a Middle East settlement. Moreover, output is being held well below capacity for economic as well as political reasons.

Other raw material suppliers, encouraged by the success of the oil embargo, now threaten to follow suit. Representatives from 16 East and Central African countries meeting in Dar-Es-Salaam, Tanzania on November 24, 1973, called for diplomatic, economic and other sanctions against the United States, Britain, France, West Germany, Japan and Brazil unless they ceased "support" for white minority regimes in Southern Africa. The Chairman of the conference, Foreign Minister John W. S. Malecela of Tanzania, said the sanctions could include a ban on both exports to and imports from the United States and the other named countries. Although most of the sixteen countries do not possess materials of vital importance to us, some of them, such as Zaire, the former Belgian Congo, clearly do.

What is perhaps more to the point, many developing countries are now tempted to form porducer cartels for the purpose of raising prices and achieving international transfers of wealth that seem otherwise impossible. One well informed observer, Ugandan social scientist Ali Mazrui, sums up their attitude as follows:

"From the point of view of millions of Asians and Africans, the Arab oil sanctions against select Western countries will probably rank in history alongside Japan's victory over Russia in 1905—as milestones in the story of how Asians and Africans discovered their own potential power against Caucasian might ... As a lever against the rich, certain Third World resources will become the equivalent of organized labor in the history of the industrialized countriesas a basis for collective bargaining."

Statements to the same effect were made recently by Algerian representatives at a meeting of developing countries in preparation for the forthcoming U.N. General Assembly on raw materials and economic development.

Economists disagree as to the probable success of price-raising producer cartels for materials other than petroleum. My own view is that growing resource pressures do promise some additional bargaining power to many developing countries, but that outside of oil the possibilities for successful producer cartels to raise prices are very doubtful-either the producers lack the identity of interest and the necessary foreign exchange reserves for a collective cutback in supply, or the consumers have too many other options in the form of large stockpiles, home-based production, and the availability of substitutes.

Producer cartels may achieve some results for their organizers in the short run, but in the middle and long run they are likely to backfire. The danger is that a policy of confrontation could push developed countries into policies of self-sufficiency, denying developing countries the technical assistance, the capital and the market access without which they cannot meet their development goals. In the economic and political backlash, even the resource-rich developing countries would lose ; and the have-not countries would lose most of all. The role of international law and organization, in my view, should be to reinforce cooperative behavior that will serve the long-run interest of all. Specifically, this would mean restricting the right of producer nations to form price-raising cartels except as part of mutually-agreed commodity arrangements in cooperation with consuming countries, as was proposed in the Charter for an International Trade Organization 25 years ago.

Lest we adopt an unduly self-righteous attitude on these matters, we should recognize frankly that the United States itself has been one of the worst offenders in using export controls in ways which have adversely affected other countries. For years we have applied an embargo on trade with Cuba. Last summer, we unilaterally cut off exports of soybeans and other agricultural products to our trading partners in Europe at the very time that we were pressing them to modify policies of agricultural self-sufficiency and become dependent on our production.

It is obvious from these examples that the whole concept of an open and cooperative trading system is under serious attack. International trade is becoming heavily "politicized.” This trend is destroying the traditions of reasonably free and non-discriminatory access to markets and supplies that are essential in an increasingly interdepen(lent world.

Since the U.N. Charter, countries are no longer permitted to use force to back up their economic claims. Quite apart from legal prohibition, such actions now entail costs and risks that make them politically undesirable. But if the Atlantic Charter concept of equal access to raw materials cannot be guaranteed by the use of force, we need to consider guaranteeing it in some other way.

There is no easy solution to this problem, but it is certainly in our own and the general interest to try to develop some new international rules and procedures to assure reasonable access to raw materials. The present state of international law in this area is not satisfactory. The General Agreement on Tariffs and Trade does contain a general prohibition on the use of export and import controls (Article XI) as well as a requirement that both export and import controls should not discriminate between countries (Article I). Article XX of GATT permits measures deviating from these and other GATT rules “relating to the conservation of exhuastible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption." The same article also permits measures "essential to the acquisition or distribution of products in general or local short supply; Provided that any such measures shall be consistent with the principle that all contracting parties are entitled to an equitable share of the international supply of such products ..." These authorizations of export restrictions are subject to the requirement that such measures "are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or disguised restrictions on international trade ..."

In this tangle of rules, exceptions to the rules, and exceptions to the exceptions to the rules, it is extremely difficult to discern any coherent guidelines for national policy. And, what is more to the point, all of these principles are effectively vitiated by a subsequent GATT article (XXI) which declares that nothing in the GATT shall be construed "to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests ... taken in time of war or other emergency in international relations...".

It seems to me that a major U.S. objective in the forthcoming trade negotiations should be to incorporate some new and stronger rules in the GATT limiting the resort to export controls. At a minimum, the new rules should prohibit the use of export or other controls for political purposes. A country should not be permitted to cut off or threaten to cut off exports in order to change another country's policies (although exceptions would be granted to permit countries to restrict the export of weapons and national security information and also to restrict trade in the course of actual hostilities). The new rules should also seek to define more precisely the economic, conservation and other purposes for which exports can be limited and should place greater emphasis on the need to take account of the interests of others. Most important of all, since the rules on this complex subject will inevitably require interpretation in specific circumstances, new GATT procedures should be created requiring advance notice, consultation, authoritative interpretation of the rules and settlement of disputes by impartial conciliation and arbitration commissions under GATT auspices.

Where countries are found to have violated the new principles and fail to adjust their policies in accordance with multilateral decisions, they should face the possibility of multilateral reprisals. If this cannot be done through the GATT, it may have to be undertaken through the OECD or some other multilateral forum. In extreme situations, multilateral sanctions may even have to be applied to countries that are not GATT members, on the theory that their violation of broadly agreed community standards are gravely threatening community interests. If we can propose cutting off air service to countries that give refuge to hijackers, if we can contemplate denying port facilities to nations that pollute the oceans with their tankers, we should certainly explore the possibility of multilateral trade, aid and investment embargoes on nations that threaten the world economy by arbitrarily withholding vital raw materials.

None of the Arab oil producing countries is a party to GATT except for Kuwait and many of the sixteen African countries who made the declaration referred to earlier are also outside the GATT. However, a number of these Arab and African countries who are not GATT members (including Saudi Arabia) have committed themselves in bilateral treaties with us to refrain

from the very measures of trade discrimination which they recently aimed in our direction. Moreover, all of these countries voted for U.N. Resolution 2625 of the 25th General Assembly, entitled “Declaration of Principles of International Law Concerning Friendly Relations and Cooperation Among States in Accordance with the Charter of the United Nations." In promulgating this resolution, the General Assembly declared that "the principles of the Charter which are embodied in this Declaration constitute basic principles of international law, and consequently appeals to all States to be guided by these principles in their international conduct and to develop their mutual relations on the basis of their strict observance."

One of the key principles of the Declaration is the following: "No State may use or encourage the use of economic, political or any other type of measures to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights and to secure from it advantages of any kind."

It was the Afro-Asian group in the United Nations, including the Arab countries, that pressed hardest for the principle quoted above and for the proposition that this principle was already part of international law. Of course, their motive was to prevent the United States and other industrialized countries from using economic power as an instrument of political pressure. It is interesting that not a single voice has been raised in the United Nations to cite this authoritative declaration of the General Assembly since the Arab oil embargo began.

In his speech to the General Assembly in September, Secretary of State Henry Kissinger announced the willingness of the United States to negotiate a new instrument on the “Economic Rights and Duties of States" as proposed by the Government of Mexico. The Department of State has hitherto been reluctant to raise the issue of access to resources in these negotiations because of our own use of export controls. We certainly cannot have it both ways. I believe we should offer to reform our practices in this area in return for reciprocal changes in the practices of others.

In implementing a new international economic policy of access to supplies we should seek to act multilaterally, not bilaterally, for at least three reasons. The first is that in most cases a threat of reprisals against raw material cut-offs will have little practical significance unless we have our OECD partners with us. The second is that unilateral U.S. action will look to others as a destructive act of nationalism unless it is related to multilateral rules and multilateral procedures. The third is that such an effort of "collective economic security" could degenerate into a North-South economic war unless it is based on principles that are acceptable to a substantial number of developed and developing countries. I would hope that the Mondale amendments in their final form would specify that the President should exercise his authority to retaliate in conformity with GATT or multilateral agreements, once these have been renegotiated to deal adequately with supply access. Pending such renegotiation, the United States would reserve the right to retaliate without multilateral approval. It should be understood, however, that the President would use this authority only as a last resort, and in conjunction with other consuming countries wherever possible.

Obviously codes of conduct by themselves are not enough. On both sides of the great economic divide, there will need to be more enlightened perceptions of national interest. In recent years, the developed countries have manifestly failed to discharge the aid and trade obligations that were necessary to make a success of the Development Decade. Partly in response to this failure, partly out of a misguided nationalism, many developing countries enlisted under the banner of "sovereignty over natural resources"-failing to see that developed countries also have "sovereignty" over their capital resources, their technology and their internal markets, and that some mutually agreed limitations of sovereignty are essential to give full possibilities to the sovereignty of all. Ironically, the greatest victims of the “sovereignty” that the OPEC countries exercised in quadrupling oil prices in 1973 were the developing countries themselves.

To sum up, I doubt that new rules and procedures assuring reasonable access to supplies can be negotiated except in a much broader context involving a fundamental restructuring of international economic relations between developed and developing countries. The developed countries are rightly concerned about secure access to raw materials at reasonable prices. But the developing countries are rightly concerned about other kinds of access-access to markets,

to capital, to technology, to management skills, and to an adequate voice in decision-making in international economic forums. The challenge facing U.S. foreign economic policy in the next few years is to help fashion the "world order bargain" that will make access to resources a negotiable element in a new system of collective economic security that works in the interests of developed and developing countries.

OTHER FEATURES OF THE BILL The trade bill could be strengthened by a number of other changes, the most important of which are suggested below: 1. Tariff authority

Section 101 gives the President authority to eliminate tariffs of 5% or less, to cut by 60% tariffs of from 5% to 25%, and to cut by 75% tariffs which are over 25%-provided that no rate over 25% is reduced below the level of 10%. I believe the national interest would be better served by replacing this formula with the zero-tariff authority contained in the original Administration bill. This would enable us to work more effectively for the objectives of the legislation set out in Section 2, particularly the goal of "open and non-discriminatory world trade." Zero-tariff authority is particularly important if we are to reduce the margin of discrimination against American trade by bargaining down the common external tariff of the enlarged European Community and the tariffs of other countries in association with it. As the President's Commission on International Trade and Investment Policy stated in its Report (p.14):

"Our objective should be the progressive elimination of most tariffs over the next 10 years, and of all tariffs over the next 25 years. Progress toward this objective would gradually eliminate the discriminatory effects on the United States and other nonmember countries of the European Community and its preferential trading arrangements."

Even if the goal of tariff elimination proves impossible, it is still in our interest to reduce world tariff levels as far as possible. We have a comparative advantage in many products, such as agricultural produce and high technology manufactures, that are currently subject to a high rate of protection by other nations. If we are restricted in the concessions that we can make in other areas, we may not be able to achieve the necessary competitive opportunities for our export industries or reach the general level of reciprocity in overall reductions that is so essential to a successful trade negotiation. Trade negotiations are a two-way street; and if one partner will go only a certain distance, the other partner cannot be expected to go any further. We should not jeopardize the trade negotiations by limiting unduly the negotiating authority of our representatives.

If the Senate is not prepared to grant zero tariff authority in the form originally proposed by the Administration, a useful compromise would be the formula adopted in the Trade Expansion Act of 1962 authorizing the elimination of duties on products for which the Community and the United States account for 80% or more of world trade. That formula was of little use in the Kennedy Round when the U.K. failed to join the Community, but it could be extremely valuable now. 2. Vontariff barrier authority

The otherwise excellent formula for negotiating on non-tariff barriers is flawed by the provisions for "sectoral equivalence” inserted by the House Ways and Means Committee. Section 102 states that a principal negotiating objective in the field of non-tariff barriers is to obtain, with respect to "each product sector of manufacturing" and with respect to the agricultural sector, "competitive opportunities” for U.S. exports to developed countries that are "equivalent" to the "competitive opportunities" afforded to these products in the U.S. In pursuit of this objective, the President is required to negotiate trade agreements "to the extent feasible" on a sector by sector basis and to indicate with respect to each trade agreement submitted to Congress the extent to which equivalent access in each sector has been achieved. Although these provisions do not appear in the section of the bill covering the President's tariff-cutting powers, the report of the Ways and Means Committee states (on page 19) that the objective of sectoral equivalence is also to be applied "to the extent feasible” in the tariff areas as well.

I believe it would serve the national interest if these provisions for "sectoral equivalence" could be removed from the legislation or at least substantially modified. In the forty years since the trade agreements program was inaugurated, we have conducted our trade negotiations on the basis of overall reciprocity, permitting concessions in one product sector to be reciprocated by concessions in another, subject only to the requirement that there be a balance of advantage in the total package. Trade-offs between product sectors have been and will continue to be necessary for the achievement of substantial progress in the reduction of trade barriers-particularly non-tariff barriers because in individual product sectors we and our trading partners differ in trading interests, productive efficiency, and the type of trade barriers we employ. It might conceivably be appropriate to require that the President seek reciprocity within the manufacturing sector as a whole in order to prevent excessive concessions here on behalf of our agricultural and service exportsalthough even this kind of requirement would need careful examination. But requiring that equivalence must henceforth be achieved in thirty or forty product sectors—which is apparently the way the legislation is interpreted by the Ways and Means Committee and the Executive Branch-risks placing unsuperable handicaps on our negotiators before the negotiations even begin. It would make it extremely difficult-perhaps impossible-to negotiate new rules in GATT on such non-tariff barriers as subsidies and government procurement, since the competitive effects of such new rules will inevitably differ from one product sector to another. In one product, we may gain somewhat greater than equivalent competitive opportunities from the new rules; for another product, somewhat less, depending on our comparative advantage or disadvantage in production.

It is significant that the idea of sectoral equivalence was carefully considered and firmly rejected by the President's Trade Commission in 1971. I believe the reasons given by the Commission's Report (p. 12) are as timely now as they were then :

“Reciprocity should be conceived in terms of the whole set of negotiations rather than as an objective to be achieved within self-contained compartments.

... In some cases, of course, it may be possible to arrive at mutually advantageous solutions within specific industrial sectors, and efforts should be made to find such solutions. On the other hand, in many cases a country will have to give more than it gets in one sector or functional area, and recoup by securing an equivalent advantage in another."

If the Senate is not prepared to drop the sectoral equivalence provisions or to modify them substantially, I would recommend, as an absolute minimum, that Section 102 (c) be amended to make it clear that its provisions are to be implemented only to the extent consistent with the overall objectives of the legislation laid down in Section 2. 3. GATT revision

Section 121 (a) directs the President to take such action as may be necessary to bring trade agreements to which the U.S. is a party—primarily the GATTinto conformity with certain "principles.” GATT urgently needs revision, and this Section would raise no problem if the "principles" subsequently enumerated were limited to broad statements of the kinds of rules sought to be achieved. Unfortunately, however, some of the numbered paragraphs appear to prejudge the question of what specific institutional means should be employed to improve the trade rules.

For example, Article 121 (a) (1) requires “the revision of decision-making machinery in the GATT to more nearly reflect the balance of economic interest" and Section 121 (a) (3) requires "the extension of GATT articles to conditions of trade not presently covered in order to move toward more fair trade prac. tices.” Given the fact that GATT now has more than 80 members and follows the rule of one-nation one-vote, amendments of the GATT articles to achieve U.S. objectives in these areas are not likely to prove feasible. A more practical approach would be to negotiate a new Code of Trade Liberalization, supplementary to GATT and supportive of it, open to participation by those relatively few key trading nations economically capable of assuming the new responsibilities, as has been proposed by the Special Advisory Panel to the Trade Committee of the Atlantic Council under the chairmanship of Ambassador John Leddy. The GATT members accepting the Code (which would deal, among other things,

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